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Author: 



Guaranty Trust Company 

of New York 

Title: 

Export trade combinations 



Place: 



[New Yorl<] 



Date: 



[1918] 



MASTER NEGATIVE * 



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140 
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Guaranty trust company of New York. 

Export trade combinations, permitted by the Webb 
law, approved April 10, 1918. [New York, etc.] Guaranty 
trust company of New York [°1918] 

46 p. 17i'". 

"Text of Webb law" : p. 40-46. 



l.JLJ. S. — Comm. 2. ^Competition, International. i. U. S. Laws, stat- 
utes, etc. II. Title, iii. Title : Webb law. 



18-23370 



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Export Trade Combination 
Under the Webb Law 



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Guaranty Trust Company 
of New York 



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i 



Export Trade Combinations 

Permitted by the Webb Law, 
Approved April 10, 1918 



Guaranty Trast Company of New York 



FIFTH AVENUE OFFICE 
Fifth Avenue and 43rd Street 

I MADISON AVENUE OFFICE 
Madison Avenue and 60tli Street 



140 Broadway 

LONDON OFFICES 
32 Lombard St., E. C. 
5 Lr. Grosvenor PI., S. W. 



PARIS OFFICE 
Rue des Italiens, 1 & 3 

TOURS OFFICE 
Rue Etienne Pallu, 7 



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SCHOOL OF BUiilK . 
COLUMBIA UNIVER6 

Foreword 



iTY 



TV. 






COPYRIGHT, 1918 
BY GUARANTY TRUST COMPANY OF NEW YORK 



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THIS booklet contains a statement of the 
purpose of the Webb Law, (approved 
April 10, 1918), which permits associations and 
combinations in export trade, and suggestions 
as to how different types of combinations 
organized for foreign trade may avail them- 
selves of its provisions. The full text of the 
law is also given. 

The reader will see clearly that the essential 
object of this law is to give American expor- 
ters a fair chance to compete with the expor- 
ters of other countries by enabling them to 
reduce the expenses of marketing, thus per- 
mitting the quotation of such prices in for- 
eign countries as will make American prod- 
ucts attractive to the consumer. Unfair 
methods in competition with rivals of other 
countries or with other American exporters 
are alike forbidden. 

Our Foreign Trade Bureau will be glad to 
discuss with inquirers the details of these sug- 
gestions, and other applications of the law. 
Executives of Trade Associations, merchants, 
and manufacturers desirous of taking advan- 
tage of these new opportunities are invited to 
consult us. 

Guaranty Trust Company of New York 



Export Trade Combinations 

THE Webb Law, permitting combinations 
in export trade, which was approved 
April 10, 1918, is an important and necessary 
step in enabhng manufacturers and producers 
to prepare to meet the post-bellum demands 
of foreign commerce. Although this country 
has built up an export trade of considerable 
magnitude, our manufacturers and producers 
have been at a disadvantage because of the 
uncertainty of the application of the Sherman 
and the Clayton Anti-Trust Acts to combina- 
tions and associations of exporters. Coopera- 
tion is necessary in order that they may 
participate in foreign trade on an even basis 
with foreign competitors, and at the same 
time, not be compelled to compete with each 
other. The Act as passed, would seem to 
allow to exporters the freedom of contract 
necessary for their protection and necessary 
to meet the competition of foreign combina- 
tions and agencies, at the same time placing 
ample check on unfair methods and abuse. 

[5] 



To Compete on Equal Terms 

The remarkable increase in the value of 
American exports during the last four years 
has been due to abnormal conditions occa- 
sioned by the war. Such conditions, of course, 
cannot be expected to continue. When trade 
again assumes its normal trend, the extraor- 
dinary demands of foreign countries for the 
products of this country will naturally be 
lessened. Foreign countries which have been 
engaged in the war, will again meet our manu- 
facturers and producers in competition in the 
world's markets. To meet that competition, 
it is essential that American exporters be 
placed on equal terms with their competitors. 
The Webb Law gives them privileges of asso- 
ciation which they have never before enjoyed, 
because of the uncertainty of the prohibitions 
of the law. 



Combinations in other Countries 

The purpose and intent of the law is to give 
to American exporters the privileges and ad- 
vantages of dealing through combinations, 
associations, or agencies similar to those which 

[61 



have so long existed in foreign countries. 
Nearly every country with which we compete 
permits and encourages manufacturers and 
producers to organize combinations to ad- 
vance its foreign trade. In Great Britain 
manufacturers and producers are permitted 
to consolidate through the medium of an 
export company. In fact, most of the leading 
products are exported under lawfully author- 
ized agreements, syndicates, and combina- 
tions. Similar cooperation is authorized or 
permitted also in France, Italy, Switzerland, 
Holland, Japan, and other countries, and the 
trade covers practically every article or prod- 
uct which we manufacture or produce for 
export. 



Types of American Organizations 

Mr. Gilbert H. Montague, of the New York 
Bar, who was counsel to the special committee 
of the American Manufacturers Export Asso- 
ciation in support of the Webb-Pomerene Bill, 
has made a study of the several types of 
selling organizations which may be formed 
under the Webb Law and the manner in which 

[7] 






existing types may be affected by the law 
under various circumstances. Among these 
types are the branch house, the export house, 
the local dealer, the traveller, and the joint 
selling organization. A summary of Mr. 
Montague's findings is presented herewith. 

The Branch House 

A familiar type of selling organization 
which has been developed in export trade is 
the branch house, which is an export branch, 
or export department, or export subsidiary 
company, of a single parent concern, which 
this parent concern wholly controls. The 
branch house has many advantages which no 
other type of selling organization possesses. 
All these advantages may be retained, with- 
out that loss of individuality and independ- 
ence which a single joint selling organization 
might involve, and to these advantages may 
be added the legal power to agree with any 
competing concern regarding allotment of ex- 
port orders, or prices to foreign buyers, or 
terms of export sales, or credits to foreign 
customers, or grades of export products, allo- 

[8] 



COLUMBIA UNIVERSIT 






cation of foreign markets, or pooling of foreign 
business, or apportionment of output for ex- 
port, or division of sales territory abroad, or 
the like, if the branch house and the com- 
peting concern qualify themselves, either as 
an Export Association, or as separate Export 
Associations, under the terms of the Webb 
Law. 

To Retain Individuality 

Another method by which the branch 
house, and any competing concern with which 
it may desire to make an arrangement of the 
character above described, can qualify as Ex- 
port Associations without merging their in- 
dividuality and independence in a single joint 
selling organization, requires that each should 
amend its articles of incorporation, and re- 
strict its business operations, so that they 
should include "solely trade or commerce in 
goods, wares, or merchandise exported, or in 
the course of being exported, from the United 
States or any Territory thereof to any foreign 
nation," and not include "the production, 
manufacture, or selling for consumption or 
for resale, within the United States or any 

[91 



Territory thereof, of such goods, wares, or 
merchandise, or any act in the course of such 
production, manufacture, or seUing for con- 
sumption or for resale/' 

Separate Incorporation Desirable 

For the branch house and any competing 
concern that are not incorporated, but are 
simply export branches or export departments 
of parent organizations, this requires, as a 
matter of practical convenience, that these 
respective export branches, or export depart- 
ments, be separately incorporated as Export 
Associations. They would then be qualified 
to enter into the arrangements for promoting 
foreign trade which are authorized under the 
new law. 

Advantages of the Export House 

The export house, by which is meant a 
self-organized, independent organization sell- 
ing in foreign markets goods that it has 
bought outright, or that it has been com- 
missioned by foreign customers to buy for 

[10] 



[^ 



their account, or that it has undertaken to 
sell, or the sales of which it has undertaken 
to finance, or the deliveries of which it has 
undertaken to effect, on commission, or on 
some other basis, for different concerns which 
have contracted with it for this service, has 
many advantages that assure its permanence 
as a type of selling organization, and the 
Webb-Pomerene Law has greatly expanded 
its field of opportunity. 

Among concerns that hitherto have stayed 
out of export trade, because of lack of re- 
sources, fear of competition, and inability to 
combine, the export house, with its knowledge 
of foreign markets, has unrivaled facilities for 
developing a satisfactory volume of export 
business upon a basis satisfactory to itself and 
to concerns at home whose accounts it can 
bring together and handle through its own 
organization. 

Combination of Competing Concerns 

SoKcitation of non-competing accounts has 
hitherto been the custom of the export house. 
With the passage of the Webb-Pomerene Law, 

[11] 



however, the combination of competing con- 
cerns, and the organization of entire indus- 
tries, into big, single, export accounts has be- 
come a very attractive possibihty. To groups 
of competing concerns, combined into Export 
Associations of one type or another, the ex- 
port house can offer selh'ng, financing, and 
shipping facilities in many foreign markets, 
which such groups might otherwise never at- 
tam. Even though such groups contract to 
ally themselves for only a few years with the 
export house, the latter, during the hfe of the 
arrangement, might have the entire export 
business of substantial fractions of whole in- 
dustries, which might yield not only satis- 
factory present profits, but also possibihties 
of future business well worth having. In the 
promotion of various types of Export Asso- 
ciations, therefore, the aggressive export mer- 
chant house may come to find one of its most 
profitable fields of activity. 

The Jobber and the Traveller 

The local dealer, by which is meant a job- 
bing or retailing concern, located in a particu- 

[12] 



lar foreign market, and selling goods that it 
has bought outright, or that it has undertaken 
to sell, on commission, or consignment, or 
some other basis, for a concern which has 
contracted with it for this selling service, and 
the traveller, by whom is meant one employed 
by a single concern to sell its goods in particu- 
lar foreign markets, and whom this concern 
wholly controls, are types of selling organiza- 
tions that stand less, perhaps, than any other 
in need of agreements between competing 
concerns. Concerns employing these types of 
selling organization may, however, obtain 
legal power to make such agreements with 
competing concerns if they, and the compet- 
ing concern with which they desire to enter 
into an agreement, each qualify themselves 
either as an Export Association, or as separate 
Export Associations. 

Joint Selling Organizations 

Since the passage of the Webb Law much 
attention has been given to the matter of its 
application to and the benefits to be derived 
from it by the joint selling organization, by 

[13] 



which is meant an organization that may 
have a greater or less degree of autonomy, 
but whose distinguishing characteristic is that 
it pools, in a single organization, the export 
activities of a number of previously compet- 
ing parent concerns. Already in various lines 
of industry groups of competing concerns are 
giving thought to various plans for single 
joint selling organizations. How to obtain 
the necessary centralization with the least 
loss of individuality and independence on the 
part of the parent concerns, is a problem 
which each industry and each group must 
solve in its own way. In his analysis Mr. 
Montague gives a number of examples of 
what has been done by various concerns to 
meet the peculiar conditions which confronted 
them. He says : 

An Industrial Example 

'' Such export trade as there was, in a certain 
American industry, had been confined to 
several large concerns represented abroad by 
branch houses or export houses. 

" Upon the return of normal conditions, it 
seemed certain that general over-production 

[14] 



SCHOOL OF BUSINESS 

CCA \mp\!^ UNiv::R3iiY 

would exist tnfbugn the industry at home, 
while abroad an active and constant demand 
would, in all probability, be resumed in vari- 
ous markets at prices and for grades on which 
many concerns in the industry would then be 
glad to quote. The handful of concerns al- 
ready selling abroad were as yet unwilling to 
alter their existing relations with branch 
houses and export houses. They would, how- 
ever, make with any joint selling organiza- 
tion comprising the rest of the industry, satis- 
factory arrangements regarding prices to for- 
eign buyers, or terms of export sales, or credits 
to foreign customers, or grades of export 
products, or other subjects of common inter- 
est. A man experienced in the industry, and 
acquainted with conditions in foreign 
markets, could be engaged for a reasonable 
salary and a fair bonus arrangement as gen- 
eral manager of a joint selling organization. 
With him, and with one or two banks familiar 
with conditions in foreign markets, plans had 
been worked out for financing the sales 
abroad, and for financing the purchases at 
home, and for a schedule of credits for sales 

[15] 



abroad and for purchases at home, and for 
opening sales branches beginning sales pro- 
motion in several selected foreign markets. 
From this, and from an estimate of prospec- 
tive operating expenses, a budget had been 
worked out of the probable financial require- 
ments of a joint selling organization. With 
the banking accommodation that seemed 
reasonably assured, and with an ample mar- 
gin for safety, an initial investment of $200,- 
000 seemed suflScient to start the organiza- 
tion. 

Organization of the Corporation 

"A corporation was finally determined upon 
to be organized under the laws of one of the 
eastern States, with its purposes carefully 
limited to those permitted by the Webb- 
Pomerene Law, and with capital stock con- 
sisting of 5,000 preferred shares and 5,000 
common shares, the preferred shares to be 
eight per centum per annum, cumulative, par 
value $100 each, to be all issued at organiza- 
tion, on which $40 per share was to be paid 
up and $60 per share was to be subject to call, 

[16] 



the common shares to be without nominal or 
par value, to be issued only as bonus, share 
for share, with subscriptions for preferred 
shares, and only to concerns actually par- 
ticipating in the joint selling arrangement. 
No participating concern was to have more 
than one vote, and each was to be represented 
upon the Board of Directors, whose powers, 
when not in session, were to be vested in a 
small Executive Committee. 

The Agency Agreement 

" Each participating concern was to execute 
an agreement with the corporation, consti- 
tuting the latter exclusive agent of the former, 
for the sale of the former's entire export product 
during the life of the agreement. This export 
product was to amount to a specified per- 
centage of the participating concern's output, 
consisting of specified grades and quantities. 
The corporation was to fix the prices at which 
it should sell the export product, and bill and 
collect therefor in its own name. The par- 
ticipating concern was to standardize, label, 
mark, pack, and ship its export product as di- 

[17] 



reeled by the corporation, and was to protect 
the latter in respect of all claims by pur- 
chasers. The participating concern was to 
bear all freight and other charges to the sea- 
board, but the corporation was to bear all 
freight and other charges beyond the sea- 
board, and all selling expenses of the corpora- 
tion. For export products which the partici- 
pating concern furnished the corporation, the 
participating concern was to be credited upon 
the basis of prices arrived at by one of a 
variety of ways. Thus, the corporation might 
take from each participating concern an op- 
tion for a specified period, upon specified 
grades and quantities at specified prices. 
Again, whenever the corporation desired to 
quote upon a prospective order, it might 
communicate with each participating con- 
cern, and fill the order from whichever par- 
ticipating concern named the lowest price. 
As compensation for its services, the corpora- 
tion was to receive and retain the excess of 
the export price at which it should sell such 
product over and above the price at which it 
purchased from the participating concern. 
The corporation was to settle with the par- 

[18] 






ticipating concern for each shipment within 
thirty days, less two per cent, discount in ten 
days. Out of the aggregate profits realized 
on the operations of the corporation, the cor- 
poration was to retain an amount sufficient 
to pay cumulative dividends at the rate of 
eight per centum per annum on its preferred 
shares, and also such amount as the Board of 
Directors should deem proper for reserves. 
Out of any balance remaining, the corpora- 
tion was to grant to each participating con- 
cern then in good standing a rebate in the 
proportion which the amount of export prod- 
uct guaranteed by each participating concern 
bore to the aggregate of similar export prod- 
ucts guaranteed by all the participating con- 
cerns. 

Another Example of Cooperation 

"Most of the concerns, in another American 
industry, had had some experience in export 
trade, and had suffered greatly from one an- 
other's competition in foreign markets. 

Upon the return of normal conditions, it 
seemed certain that export trade would be 

[19] 






resumed with a recurrence of the former un- 
satisfactory conditions, in which foreign 
buyers, as formerly, would combine to pre- 
sent a united front against each American 
exporter, and by playing one against another 
would force each to underbid the other until 
as so often had occurred in the past, the com- 
bined foreign buyers would obtain the prod- 
uct below a fair and reasonable price. Most 
of the concerns in the industry had suffered 
so much in the past from these conditions, 
and were so fully convinced of the wastes 
involved in their competition with one an- 
other in foreign markets, that they were ready 
to cooperate in any reasonable form of single 
joint selling organization. A man who had 
made his mark as foreign sales manager 
for one of the concerns, and whose integrity 
and impartiality were approved by all, could 
be engaged as general manager. Desirable 
locations in a number of foreign markets 
could be secured simply by taking over 
branches already maintained there by one or 
another of the participating concerns. There 
was abundant past experience from which to 

[20] 



plan the oflSce management and sales organ- 
ization, to work out the details of selling, 
credits, financing, shipping, and traffic, and 
to draw up a budget of probable financial re- 
quirements for a joint selling organization. 

Form of Incorporation 

**A corporation of $150,000 capitalization, 
entirely of paid-up common stock, was finally 
determined upon, to be organized under the 
laws of one of the western States, with its 
purposes carefully limited to those permitted 
by the Webb-Pomerene Law. Only concerns 
which should agree to sell their entire export 
output through the corporation were eligible 
to become stockholders; and no concern was 
to be entitled to more than one vote, regard- 
less of the number of shares it might own; and 
no concern, or group of concerns, was ever to 
obtain a majority interest or dominating 
control of the corporation. To carry out 
these provisions, every share of stock, except- 
ing the qualifying shares, was to be endorsed 
in blank by the stockholder and deposited in 

[21] 



I 



trust with stock trustees. Upon this stock 
the corporation was to have a first lien as 
security for the faithful observance and per- 
formance by the stockholders of the corporate 
by-laws and resolutions and of any agree- 
ments entered into or obligations incurred by 
the stockholder with respect to the corpora- 
tion. In event of the stockholder's default 
in this regard, the Board of Directors could 
tender to the stockholder the book value, not 
exceeding the par value, of his stock, less any 
indebtedness owing by the stockholder to the 
corporation, and could then cancel his stock, 
and reissue it to the stock trustees, who in 
turn might sell it to concerns eligible to be- 
come stockholders. According to the by-laws, 
specified geographical groups of stockholders 
were always to be entitled to specified num- 
bers of directors in the Board of Directors and 
in the Executive Committee. Dividends were 
to be limited to seven per centum per annum, 
and surplus earnings were to be retained for 
reserves, or expended in sales promotion in 
export trade, according as the Board of Di- 
rectors might determine. 

[22] 



Agreements with Participating Concerns 

"Each participating concern was to execute 
an agreement with the corporation, consti- 
tuting the latter the exclusive agent of the 
former, for the sale of the former's entire ex- 
port product during the life of the agreement. 
This export product was to consist of a speci- 
fied quota determined from time to time by 
the Board of Directors of the corporation. 
The corporation was to sell the export prod- 
uct at such prices as the corporation should 
be able to obtain, and was to allot its orders 
fairly and impartially among the participat- 
ing concerns, as nearly as possible in accord- 
ance with quotas determined from time to 
time by the Board of Directors of the corpora- 
tion. Each participating concern was to 
accept and execute such orders as the cor- 
poration should assign to it. The corporation 
was to guarantee all accounts that it should 
sell, and was to settle with each participating 
concern for each shipment within thirty days, 
and was to retain for its services a commission 
of two and one-haK per centum. The agree- 
ment between the corporation and the par- 

123] 



♦ 



ticipating concern was to provide for no 
rebate upon this commission, and the only 
refund of any kind to which the participating 
concern was to be entitled was in the form of 
dividends upon such stock as the participat- 
ing concern might own in the corporation. 

Another Typical Case 

"Most of the concerns, in another American 
industry, had for years been selling a substan- 
tial part of their output in export trade, and 
had suffered greatly, in the manner above de- 
scribed, from combinations of foreign buyers. 

"Much as the industry had suffered from 
this cause, however, certain concerns, whose 
cooperation was deemed to be essential, 
were known to be adverse to become full 
members of any single joint selling organiza- 
tion. Every concern, on the other hand, had 
for years been accustomed to sell its export 
product through one or another agent, whom 
it had paid, on a commission basis, for selling, 
financing, and effecting deliveries abroad. 

"A well qualified general manager, and suit- 
able foreign representatives, were readily 

[24] 



available for a joint selling organization. The 
financial requirements of such an organiza- 
tion, also, were ascertainable with reasonable 
accuracy, and were easily within the ability 
of the industry to provide. A corporation was 
accordingly determined upon, to be organized 
under the laws of one of the eastern States 
with its purposes carefully limited to those 
permitted by the Webb-Pomerene Law, and 
with a cash capital of $100,000 to be obtained 
by the issue of partly paid common stock, the 
balance to be subject to call in event of any 
unexpected increase in the financial require- 
ments of the corporation. Only concerns that 
should agree to sell their entire export prod- 
uct through the corporation over a specified 
number of years were to be eligible to become 
stockholders. 

Method of Sales Distribution 

"Each participating concern was to execute 
an agreement with the corporation, constitut- 
ing the latter the exclusive agent of the 
former, for the sale of the former's entire ex- 
port product during the life of the agreement. 

[25] 



This export product was to amount to a speci- 
fied proportion of the participating concern's 
output. The corporation was to sell the ex- 
port product at the best prices that it could 
obtain, and was to allot orders among the 
participating concerns as nearly as possible 
in proportion to the amount of export prod- 
uct which each had guaranteed to the cor- 
poration. The participating concern was to 
standardize, label, mark, pack, and ship its 
export product as directed by the corporation, 
and was to protect the latter in respect of all 
claims by purchasers. The participating con- 
cern was to bear all freight and other charges 
to the seaboard, but the corporation was to 
bear all freight and other charges beyond the 
seaboard, and all expenses of the corporation. 
For such products as the participating con- 
cern furnished the corporation, the partici- 
pating concern was to be credited upon the 
basis of prices specified in a schedule attached 
to the agreement. As compensation for its 
services, the corporation was to receive u 
commission of three and one-half per cen- 
tum, and to retain the excess of the export 

[26] 



price at which it should sell such product 
over and above the price at which it pur- 
chased from the participating concern. The 
corporation was to settle with the participat- 
ing concern for each shipment within ten days 
after delivery of shipment at the seaboard, 
less two per cent, discount for cash against 
bills of lading to the seaboard. Out of the 
aggregate commissions received by the cor- 
poration, the corporation was to retain an 
amount suflScient to pay dividends at the 
rate of seven per centum per annum on its 
capital stock, and also such amount as the 
Board of Directors should deem proper for 
reserves. Out of any balance remaining, the 
corporation was to grant to each participating 
concern, then in good standing, a rebate in 
the proportion which the amount of export 
product guaranteed by each participating 
concern bore to the aggregate of similar export 
products guaranteed by all the participating 
concerns. 

''Traveling in Double Harness^' 

"This agreement was to be the basis upon 
which the corporation would sell the export 

[27] 



product of concerns participating as stock- 
holders in the joint selling organization. But 
some concerns, as already has been stated, 
were known to be adverse to becoming full 
members of any single joint selling organiza- Ij 
tion. Each of these concerns, however, had | 
for years been accustomed to sell its export 
product through one or another agent, whom 
it had paid on a commission basis, for selling, 
financing, and effecting deliveries abroad. 
Each of these concerns, accordingly, was to 
be invited to make an agency agreement with j 
the corporation, similar in all substantial 
respects to the agency agreements which it 
had been accustomed to make with its 
former agents. These agreements were to 
contain provisions for their termination, by 
either party, upon fairly short notice, so that 
each party would have a prompt way of 
escape if these agreements should prove un- 
satisfactory. During the life of these agree- 
ments, however, the concerns entering into 
them could try out the experiment of travel- 
ling in double harness with the rest of the 
industry, and if they found the experiment 

[28] 



satisfactory, they could then all combine, 
upon a more enduring basis, as stockholders 
and full participating members, in a joint 
selling organization. 

The Joint Type of Organization 

"In the examples of joint selling organiza- 
tions above described, it was the organization 
itself that undertook the work of selling 
abroad. This, however, is not an essential 
characteristic of the joint selling type of organi- 
zation. A joint selling organization, having 
contracted with its members for their entire 
export product, may find it the part of wisdom 
to contract then with an export house for the 
disposal of its export product, on commission, 
or on some other satisfactory basis. The 
export house, as shown above, may undertake 
for the joint selling organization the actual 
work of selling, financing, and effecting de- 
liveries of the export product controlled by 
the joint selling organization. For the export 
house, this arrangement might be attractive 
because it would result in the consolidation 
of a number of separate small, indiflferent 

[29] 



I 



i 



accounts into a single, substantial, desirable 
account. For the participating concerns com- 
bining in the joint selling organization, the 
arrangement might be attractive, because it 
would promise profit with the minimum of 
risk and overhead expense, and would assure 
better terms, from the export house than each 
of the participating concerns could possibly 
expect. Again, a joint selling organization, 
desiring itself to undertake the work of selling 
abroad, but not on so ambitious a scale as in 
the examples above described, might decide 
to sell through local dealers, or through a 
traveller, in the mode characteristic of those 
types of selling organization. Thus it might 
save all the wastes of competition, and all the 
economies of combination, which savings and 
economies the joint type of organization 
makes possible, and at the same time might 
obtain all the advantages which other types 
of selling organization afford in many foreign 
markets. 

Wide Choice of Methods 

"A joint selling organization, having" con- 
tracted for the entire export product of its 

[30] 



participating concerns, is therefore unfettered 
in its choice of methods for selling in export 
trade, and is in position to market abroad 
through branch houses, or export houses, or 
local dealers, or travellers, through any type 
of selling organization whatsoever. 

Combination of Joint Selling Organizations 

"Nor should it be forgotten that joint selling 
organizations, like all other types of Export 
Associations, may combine with one another 
into larger, and more comprehensive joint 
selling organizations, whenever greater econ- 
omies, or more eflSciency, or any other ad- 
vantages, to themselves and to the concern 
participating in them, appear to lie in that 
direction. And should combination of this 
character appear desirable, but obstacles be 
presented in the loss of individuality and 

independence which a larger joint selling 
organization might involve, it should not be 
forgotten that single joint selling organiza- 
tions, instead of combining into a larger sell- 
ing organization, may simply enter into agree- 
ments with one another regarding allotment 

[31] 



'I I 

I 



Ml 






of export orders, or prices to foreign buyers, 
or terms of export sales, or credits to foreign 
customers, or grades of export products, or 
allocation of foreign markets, or pooling of 
foreign business, or apportionment of output 
for export or division of sales territory 
abroad, or common selling agencies for export, 
or joint representation in export trade, or the 
like. Nor, finally, should it be forgotten that 
the humblest American exporter, whether he 
sells through an export house, or local dealers, 
or a traveller, or only by mail order, may 
nevertheless deal at arm's length with the 
largest joint selling organization, or may come 
to terms with it, if the terms are satisfactory 
to both parties, upon any agreement of the 
character above described, or, if he prefer, 
may go his own gait in export trade, with 
absolute assurance that the Federal Trade 
Commission will protect him against any act 
of his big competitor that constitutes unfair 
competition or restraint upon his export 
trade/' 



[32] 



Provisions of the Law 



Export Trade Defined 

The term "export trade, ''as used in the law, 
means solely trade or commerce in goods, 
wares, or merchandise exported or in the 
course of being exported from the United 
States or any territory thereof, to any foreign 
nation. The words "export trade" are deemed 
to exclude the production, manufacture, or sell- 
ing for consumption or for resale, within the 
United States or any territory thereof, of 
goods, wares, or merchandise, or any act in 
the course of such production, manufacture, 
or selling for consumption or resale. 

Trade Within the United States Defined 

The words "trade within the United States" 
as used in the Act, mean trade or commerce 
among the several states, or in any territory 
of the United States, or in the District of 
Columbia, or between any such territory and 
another, or between any such territory or 

[ 33 ] 



i 



I 



territories and any State or States or the 
District of Columbia, or between the District 
of Columbia and any State or States. 

Association Defined 

"Association," as used in the law, means any/ 
corporation or combination, by contract or' 
otherwise, of two or more persons, partner- 
ships or corporations. 

Restrictions of Anti-Trust Laws Removed 

Section 2 of the Act exempts export com- 
binations or associations from the operation 
of the Sherman Anti-Trust Act, providing 
such combination or association is not in 
restraint of trade within the United States 
and is not in restraint of the export trade of 
any domestic competitor. It is expressly pro- 
vided, however, that any such association 
may not, either in the United States or else- 
where, enter into any agreement, or under- 
standing, or conspiracy, or do any act which 
artificially or intentionally enhances or de- 
presses prices within the United States of 
commodities of the class exported by such 
associations, or which substantially lessens 

[34] 



competition within the United States, or 
otherwise restrains trade therein. 

Section 3 of the Act permits the acquisition 
or ownership by any corporation of the whole 
or any part of the stock or other capital of 
any corporation organized solely for the pur- 
pose of engaging in export trade and actually 
engaged solely in such export trade, notwith- 
standing the provisions of Section 7 of the 
Clayton Anti-Trust Law. It is specifically 
provided, however, that such acquisition or 
ownership will not be permitted if its effect 
may be to restrain trade or substantially 
lessen competition within the United States. 

Unfair Competition Prohibited 

Although permitting cooperation and associa- 
tion as above provided. Section 4 of the 
Act expressly states that the prohibitions 
against unfair methods of competition and 
the remedies provided for enforcing such 
prohibitions contained in the Act approved 
September 26, 1914, creating the Federal 
Trade Commission, are extended to unfair 
methods of competition used in export trade 

[35] 






against competitors engaged in export trade, 
even though the acts constituting such unfair 
methods are done without the territorial 
jurisdiction of the United States. 

Reports to Federal Trade Commission 

Associations now engaged solely in export 
trade are required to file with the Federal 
Trade Commission, within sixty days after 
the enactment of the law, a verified, written 
statement setting forth : 

(1) The location of its oflSces or places of 
business. 

(2) The names and addresses of all its 
officers and of all its stockholders or members. 

(3) If a corporation, a copy of its certificate 
or articles of incorporation and by-laws. 

(4) If unincorporated, a copy of its articles 
or contract of association. 

Every association entered into after the 
passage of the law is required to file a similar 
statement within thirty days after its crea- 
tion. 

After the filing of the first statement as 
above, an annual statement shall be filed on 

[36] 



the first day of January of ^each year showing 
the location of its offices or places of business 
and the names and addresses of all its officers 
and of all its stockholders or members, show- 
ing all amendments to and changes in its 
articles or certificate of incorporation or in 
its articles or contract of association. Asso- 
ciations must also furnish such information 
as the commission may require as to their 
organization, business, conduct, practices, 
management, and relation to other associa- 
tions, corporations, partnerships, and in- 
dividuals. 

Failure to file reports as above required 
shall , prohibit any association from enjoying 
the benefits provided by the law. Such 
association shall also forfeit to the United 
States, the sum of $100.00 for each day of its 
continuance of such failure, which forfeiture 
shall be recoverable by civil suit in the name 
of the United States under the direction of 
the Attorney-General of the United States. 

Investigation by Federal Trade Commission 

Whenever the Federal Trade Commission 
has reason to believe 

[37] 



(1) that an association is in restraint of 
trade within the United States or in restraint 
of the export trade of any domestic com- 
petitor of such association; or 

(2) that an association either in the United 
States or elsewhere has entered into any 
agreement, understanding, or conspiracy or 
done any act which artificially or intention- 
ally enhances or depresses prices within the 
United States of commodities of the class 
exported by such association, or which sub- 
stantially lessens competition within the 
United States or otherwise restrains trade 
therein, 

it is authorized to summon the oflBcers or 
agents of such association and conduct an 
investigation into the alleged violations of 
the law. If the Commission finds that the 
association investigated has violated the law, 
it may make recommendations to the associa- 
tion for the readjustment of its business in 
order that it may thereafter maintain its 
organization and management, and conduct 
its business in accordance with the law. If 
the association fails to comply with the 

[38] 



recommendations made by the Federal Trade 
Commission, such recommendations shall be 
referred to the Attorney-General of the 
United States for such action thereon as he 
may deem proper. 

Enforcement of Law 

For the purpose of enforcing the provisions 
of this law, the Federal Trade Commission 
is given all the powers, so far as applicable, 
conferred upon it by the Act entitled "An 
Act to create a Federal Trade Commission, 
to define its powers and duties, and for other 
purposes." 



SCHOOL DF 8US1NLS3 
COLUiyiBIA UNIVERSITY 



[39] 



Text of Webb Law 



An Act to promote export trade, and for 
other purposes. 

Be it enacted by the Senate and House of 
Representatives of the United States of Amer- 
ica in Congress assembled, That the words 
" export trade " wherever used in this Act mean 
solely trade or commerce in goods, wares, 
or merchandise exported, or in the course of 
being exported from the United States or 
any Territory thereof to any foreign nation; 
but the words *' export trade" shall not be 
deemed to include the production, manu- 
facture, or selling for consumption or for re- 
sale, within the United States or any Terri- 
tory thereof, of such goods, wares, or mer- 
chandise, or any act in the course of such 
production, manufacture, or selling for con- 
sumption or resale. 

That the words "trade within the United 
States" wherever used in this Act mean 
trade or commerce among the several States 
or in any Territory of the United States, or 

[40] 



in the District of Columbia, or between any 
such Territory and another, or between any 
such Territory or Territories and any State 
or States or the District of Columbia, or 
between the District of Columbia and any 
State or States. 

That the word "association" wherever 
used in this Act means any corporation or 
combination, by contract or otherwise, of 
two or more persons, partnerships, or cor- 
porations. 

Sec. 2. That nothing contained in the Act 
entitled "An Act to protect trade and com- 
merce against unlawful restraints and mon- 
opolies," approved July second, eighteen 
hundred and ninety, shall be construed as 
declaring to be illegal an association entered 
into for the sole purpose of engaging in export 
trade and actually engaged solely in such 
export trade, or an agreement made or act 
done in the course of export trade by such 
association, provided such association, agree- 
ment, or act is not in restraint of trade within 
the United States, and is not in restraint of 
the export trade of any domestic competitor 

[411 



of such association: And provided further, 
That such association does not, either in the 
United States or elsewhere, enter into any 
agreement, understanding, or conspiracy, or 
do any act which artificially or intentionally 
enhances or depresses prices within the 
United States of commodities of the class 
exported by such association or which sub- 
stantially lessens competition within the 
United States or otherwise restrains trade 

therein. 

Sec. 3. That nothing contained in section 
seven of the Act entitled "An Act to supple- 
ment existing laws against unlawful restraints 
and monopolies, and for other purposes," 
approved October fifteenth, nineteen hundred 
and fourteen, shall be construed to forbid 
the acquisition or ownership by any corpo- 
ration of the whole or any part of the stock 
or other capital of any corporation organized 
solely for the purpose of engaging in export 
trade, and actually engaged solely in such 
export trade, unless the effect of such acquisi- 
tion or ownership may be to restrain trade 
or substantially lessen competition within the 
United States. 

[42] 



' 



Skc. 4. That the prohibition against "un- 
fair methods of competition" and the rem- 
edies provided for enforcing said prohibition 
contained in the Act entitled "An Act to 
create a Federal Trade Commission, to define 
its powers and duties, and for other pur- 
poses," approved September twenty-sixth, 
nineteen hundred and fourteen, shall be con- 
strued as extending to unfair methods of 
competition used in export trade against 
competitors engaged in export trade, even 
though the acts constituting such unfair 
methods are done without the territorial 
jurisdiction of the United States. 

Sec. 5. That every association now en- 
gaged solely in export trade, within sixty 
days after the passage of this Act, and every 
association entered into hereafter which en- 
gages solely in export trade, within thirty 
days after its creation, shall file with the 
Federal Trade Commission a verified written 
statement setting forth the location of its 
oflSces or places of business, and the names 
and addresses of all its oflScers and of all its 
stockholders or members, and if a corpo- 

[43] 



ration, a copy of its certificate or articles of 
incorporation and by-laws, and if unincor- 
porated, a copy of its articles or contract 
of association, and on the first day of Jan- 
uary of each year thereafter it shall make a 
like statement of the location of its oflBces or 
places of business and the names and ad- 
dresses of all its oflBcers and of all its stock- 
holders or members and of all amendments 
to and changes in its articles or certificate of 
incorporation or in its articles or contract 
of association. It shall also furnish to the 
commission such information as the com- 
mission may require as to its organization, 
business, conduct, practices, management, 
and relation to other associations, corpora- 
tions, partnerships, and individuals. Any 
association which shall fail so to do shall not 
have the benefit of the provisions of section 
two and section three of this Act, and it shall 
also forfeit to the United States the sum of 
$100 for each and every day of the con- 
tinuance of such failure, which forfeiture shall 
be payable into the Treasury of the United 
States, and shall be recoverable in a civil 

[44] 



suit in the name of the United States brought 
in the district where the association has its 
principal oflSce, or in any district in which 
it shall do business. It shall be the duty of 
the various district attorneys, under the 
direction of the Attorney-General of the 
United States, to prosecute for the recovery 
of the forfeiture. The costs and expenses of 
such prosecution shall be paid out of the 
appropriation for the expenses of the courts 
of the United States. 

Whenever the Federal Trade Commission 
shall have reason to believe that an associa- 
tion or any agreement made or act done by 
such association is in restraint of trade within 
the United States or in restraint of the export 
trade of any domestic competitor of such 
association, or that an association either in 
the United States or elsewhere has entered 
into any agreement, understanding, or con- 
spiracy, or done any act which artificially 
enhances or depresses prices within the United 
States of commodities of the class exported 
by such association or which substantially 
lessens competition within the United States 

[45] 



or otherwise lessens trade therein, it shall 
summon such association, its oflBcers, and 
agents to appear before it, and thereafter 
conduct an investigation into the alleged 
violations of law. Upon investigation, if it 
shall conclude that the law has been violated, 
it may make to such association recommenda- 
tions for the readjustment of its business, in 
order that it may thereafter maintain its 
organization and management and conduct 
its business in accordance with law. If such 
association fails to comply with the recom- 
mendations of the Federal Trade Commis- 
sion, said commission shall refer its findings 
and recommendations to the Attorney-Gen- 
eral of the United States for such action 
thereon as he may deem proper. 

For the purpose of enforcing these provi- 
sions the Federal Trade Commission shall 
have all the powers, so far as applicable, 
given it in *'An Act to create a Federal Trade 
Commission, to define its powers and duties, 
and for other purposes.'' 

Approved April 10, 1918. 

[46] 



COLUMBIA UNIVERSITY LIBRARIES 

This book is due on the date indicated below, or at the 
expiration of a definite period after the date of borrowing, as 
provided by the library rules or by special arrangement with 
the Librarian in charge. 



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